Abstract

Credit risk is one of important challenges facing banks and credit institutions in all economic systems.Accordingly, much research has focused on credit scoring of bank customers and to predict and classify solventcustomers and insolvent customers. In this line, the present study has attempted to identify and employ financialratios affecting the creditworthiness of banking customers using discriminant analysis and logistic regression todetermine the reliability of different credit scoring models in predicting creditworthiness of banking customers.To do so, customers’ credit files in one of the branches of commercial Iranian banks in Province wereinvestigated and totally 54 creditable firms and 46 non-creditable firms were identified. The creditworthiness ofthese firms was determined through discriminant analysis and logic regression using financial informationobtained from the sample firms from 2006 to 2011. The results of the study indicated that the two fitted modelsare reasonable reliable in predicting the creditworthiness of banking customers. However, the logic regressionmodel had a higher discrimination power than the discriminant analysis model.

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